1 Trillion Dollars in Trade for 2 Straight Years … Exports of Semiconductors about to Reach 100 Bill

2018-07-04

1
Trillion Dollars in Trade for 2 Straight Years … Exports of Semiconductors
about to Reach 100 Billion Dollars for the First Time

-Uncertainties such as the US trade pressure,
interest rate hike, the US-China trade disputes are

still remaining -

Korea is
expected to reach 1 trillion dollars in trade value for the second consecutive
year. Semiconductor is expected to exceed 100 billion dollars in exports for
the first time as a single product.

According
to a report titled ‘Assessment of Imports and Exports in 1H of 2018 and
Prospects for 2H’ issued by the Institute for International Trade (President,
Shin Seung-kwan) of the Korea International Trade Association, Korea is
expected to secure 1 trillion dollars in trade for two consecutive years as
this year's exports of Korea reached 605 billion dollars, increased by 5.5
percent from last year, and its imports recorded 531 billion dollars, increased
by 11 percent year-on-year. Export growth is expected to slow down slightly
from 6.4 percent in the first half of the year to 4.6 percent in the second
half due to the recent slowdown in export unit prices increase and the base
effect of shipbuilding exports and semiconductor boom that were concentrated
last year.

Exports of
flagship items are expected to remain brisk in the second half of the year on
the back of the upward trend in global economic growth, robust IT boom, and
rising oil prices. Semiconductors are expected to continue to be strong in the
second half of the year, with annual exports exceeding 100 billion dollars for
the first time as a single item. However, it is forecast that the export growth
will be somewhat sluggish dropping to16.6 percent in the second half of the
year as China will ramp-up the memory production following the massive
investment in the industry and the base effect of the export boom.

Since
petrochemicals, petroleum products, computers and general machinery remain
strong and the decreased exports of automobiles and automobile parts will turn
to increase and the exports of mobile phones and display will decline slightly
in the second half of the year, Korea’s exports will be less dependent on
semiconductors. It means that the contribution of the exports of semiconductors
to Korea’s total exports will decrease from 82.1 percent in the first half of
the year (January~May) to 68.2 percent in the second half.

It is
concerned that export uncertainties, such as trade pressure from the United States,
the spread of protectionism due to the US-China trade disputes, and the
economic uncertainty in emerging economies following the acceleration of the US
interest rate hike will continue in the second half of this year. In fact,
after the United States set quotas for Korean steel based on the US import
regulation, Korea’s exports of steel products to the United States have dropped
sharply since March, and the exports of washing machines and solar cells, that
are subject to safeguards, were 50 percent and 16.6 percent, respectively
between January and May.

The report
stated, "Export items in the first half of the year were significantly
diversified as high value-added items such as new industries related to the
fourth industrial revolution and promising consumer goods did well."
Exports of eight new industries, including electric cars, bio-health and
advanced materials, stood at 25.6 billion dollars increased by 29.2 percent
year-on-year. The top five promising consumer goods such as agricultural and fishery
products, household goods, cosmetics, pharmaceuticals and fashion apparel also
recorded an increase of 18.6 percent with 11.5 billion dollars, exceeding the
overall export growth rate of 8.1 percent.

Moon
Byung-ki, a senior researcher at the Institute for International Trade of KITA
stressed, “In order to maintain solid exports in the second half of the year,
Korea needs to actively respond to short-term risks such as trade
protectionism, exchange rate and interest rate volatility, and strengthen the
exporters through the high value-added strategy for materials and parts
industries, including steel, chemical and textile as well as the
diversification of the market by utilizing free trade agreements networks.”